Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/70057
Authors: 
Bandulet, Martin
Morasch, Karl
Year of Publication: 
2001
Series/Report no.: 
Volkswirtschaftliche Diskussionsreihe, Institut für Volkswirtschaftslehre der Universität Augsburg 200
Abstract: 
Do firms have proper incentives to invest in electronic coordination? We discuss this question in an oligopoly model with a local firm and a distant competitor that may reduce transport costs by investing in electronic coordination. In a two-stage game with investment in the first stage and price or quantity competition with differentiated products in the second stage we compare profit maximizing investment with (constrained) welfare maximization by a social planer. Depending on market demand, firm conduct and investment costs either over- or underinvestment may result: The firm will overinvest if the negative impact on its competitor exceeds the gain in consumer surplus. This is shown to be especially likely under quantity competition with (almost) homogenous products.
Subjects: 
Electronic Markets
Strategic Investments
Transport Costs
Product Differentiation
JEL: 
D43
D61
L13
Document Type: 
Working Paper

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.